During the long run:
A) Output is limited by the law of diminishing returns.
B) The firm can build or lease any size factory.
C) Some inputs are fixed and some are variable.
D) There are no economic costs.

Question

Quizplus · Accepted Answer

In the long run, all inputs are variable, allowing firms to adjust their production capacity fully, which includes building or leasing any size factory to meet their production needs. The law of diminishing returns and the concept of fixed and variable inputs apply to the short run, not the long run. Economic costs always exist.

During the Long Run